Documents
Resources
Learning Center
Upload
Plans & pricing Sign in
Sign Out

Power Of Attorney - CENTRAL HUDSON GAS & ELECTRIC CORP - 2-19-2003

VIEWS: 8 PAGES: 28

									Exhibit 24 (ii) POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that I, PAUL J. GANCI, Chairman of the Board and Chief Executive Officer, a Principal Executive Officer and a Director of Central Hudson Gas & Electric Corporation ("Corporation"), have made, constituted and appointed, and by these presents do make, constitute and appoint, DONNA S. DOYLE , STEVEN V. LANT, and JOHN E. GOULD, and each of them, my true and lawful attorneys, for me and in my name, place and stead, and in my office and capacity as aforesaid, to sign and file the Corporation's Annual Report, on Form 10-K, for the year ended December 31, 2002, with the Securities and Exchange Commission, as combined with the Annual Report on Form 10-K, for the year ended December 31, 2002 of CH Energy Group, Inc., the parent corporation, pursuant to the applicable provisions of the Securities Exchange Act of 1934, together with any and all amendments and supplements to said Annual Report and any and all other documents to be signed and filed with the Securities and Exchange Commission in connection therewith, hereby granting to said attorneys, and each of them, full power and authority to do and perform each and every act and thing whatsoever requisite and necessary to be done in the premises as fully, to all intents and purposes, as I might or could do if personally present, hereby ratifying and confirming in all respects all that said attorneys or any of them may or shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have set my hand and seal this 22nd day of January, 2003.
/s/ Paul J. Ganci L.S. ---------------------------------) : ss.: COUNTY OF DUTCHESS ) STATE OF NEW YORK

On this 22nd day of January, 2003, before me personally came PAUL J. GANCI to me known and known to me to be the individual described in and who executed the foregoing instrument, and duly acknowledged to me that he executed the same.
/s/ Maureen M. Boes ---------------------------------Notary Public

POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that I, STEVEN V. LANT, Chief Financial Officer, a Principal Financial Officer and a Director of Central Hudson Gas & Electric Corporation ("Corporation"), have made, constituted and appointed, and by these presents do make, constitute and appoint, PAUL J. GANCI, DONNA S. DOYLE and JOHN E. GOULD, and each of them, my true and lawful attorneys, for me and in my name, place and stead, and in my office and capacity as aforesaid, to sign and file the Corporation's Annual Report, on Form 10-K, for the year ended December 31, 2002, with the Securities and Exchange Commission, as combined with the Annual Report on Form 10-K, for the year ended December 31, 2002 of CH Energy Group, Inc., the parent corporation, pursuant to the applicable provisions of the Securities Exchange Act of 1934, together with any and all amendments and supplements to said Annual Report and any and all other documents to be signed and filed with the Securities and Exchange Commission in connection therewith, hereby granting to said attorneys, and each of them, full power and authority to do and perform each and every act and thing whatsoever requisite and necessary to be done in the premises as fully, to all intents and purposes, as I might or could do if personally present, hereby ratifying and confirming in all respects all that said attorneys or any of them may or shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have set my hand and seal this 22nd day of January, 2003.
/s/ Steven V. Lant L.S. ---------------------------------) : ss.: COUNTY OF DUTCHESS ) STATE OF NEW YORK

On this 22nd day of January, 2003, before me personally came STEVEN V. LANT to me known and known to me to be the individual described in and who executed the foregoing instrument, and duly acknowledged to me that he executed the same.
/s/ Maureen M. Boes ---------------------------------Notary Public

POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that I, CARL E. MEYER, President and Chief Operating Officer, a Principal Executive Officer and a Director of Central Hudson Gas & Electric Corporation ("Corporation"), have made, constituted and appointed, and by these presents do make, constitute and appoint, PAUL J. GANCI, DONNA S. DOYLE, STEVEN V. LANT, and JOHN E. GOULD, and each of them, my true and lawful attorneys, for me and in my name, place and stead, and in my office and capacity as aforesaid, to sign and file the Corporation's Annual Report, on Form 10-K, for the year ended December 31, 2002, with the Securities and Exchange Commission, as combined with the Annual Report on Form 10-K, for the year ended December 31, 2002 of CH Energy Group, Inc., the parent corporation, pursuant to the applicable provisions of the Securities Exchange Act of 1934, together with any and all amendments and supplements to said Annual Report and any and all other documents to be signed and filed with the Securities and Exchange Commission in connection therewith, hereby granting to said attorneys, and each of them, full power and authority to do and perform each and every act and thing whatsoever requisite and necessary to be done in the premises as fully, to all intents and purposes, as I might or could do if personally present, hereby ratifying and confirming in all respects all that said attorneys or any of them may or shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have set my hand and seal this 22nd day of January, 2003.
/s/ Carl E. Meyer L.S. ---------------------------------) : ss.: COUNTY OF DUTCHESS ) STATE OF NEW YORK

On this 22nd day of January, 2003, before me personally came CARL E. MEYER to me known and known to me to be the individual described in and who executed the foregoing instrument, and duly acknowledged to me that he executed the same.
/s/ Maureen M. Boes ---------------------------------Notary Public

POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that I, ARTHUR R. UPRIGHT, Senior Vice PresidentRegulatory Affairs, Financial Planning and Accounting, an Officer and a Director of Central Hudson Gas & Electric Corporation ("Corporation"), have made, constituted and appointed, and by these presents do make, constitute and appoint, PAUL J. GANCI, DONNA S. DOYLE, STEVEN V. LANT, and JOHN E. GOULD, and each of them, my true and lawful attorneys, for me and in my name, place and stead, and in my office and capacity as aforesaid, to sign and file the Corporation's Annual Report, on Form 10-K, for the year ended December 31, 2002, with the Securities and Exchange Commission, as combined with the Annual Report on Form 10-K, for the year ended December 31, 2002 of CH Energy Group, Inc., the parent corporation, pursuant to the applicable provisions of the Securities Exchange Act of 1934, together with any and all amendments and supplements to said Annual Report and any and all other documents to be signed and filed with the Securities and Exchange Commission in connection therewith, hereby granting to said attorneys, and each of them, full power and authority to do and perform each and every act and thing whatsoever requisite and necessary to be done in the premises as fully, to all intents and purposes, as I might or could do if personally present, hereby ratifying and confirming in all respects all that said attorneys or any of them may or shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have set my hand and seal this 22nd day of January, 2003.
/s/ Arthur R. Upright L.S. ---------------------------------) : ss.: COUNTY OF DUTCHESS ) STATE OF NEW YORK

On this 22nd day of January, 2003, before me personally came ARTHUR R. UPRIGHT to me known and known to me to be the individual described in and who executed the foregoing instrument, and duly acknowledged to me that he executed the same.
/s/ Maureen M. Boes ---------------------------------Notary Public

POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that I, DONNA S. DOYLE, Vice PresidentAccounting and Controller, a Principal Accounting Officer of Central Hudson Gas & Electric Corporation ("Corporation"), have made, constituted and appointed, and by these presents do make, constitute and appoint, PAUL J. GANCI, STEVEN V. LANT, and JOHN E. GOULD, and each of them, my true and lawful attorneys, for me and in my name, place and stead, and in my office and capacity as aforesaid, to sign and file the Corporation's Annual Report, on Form 10-K, for the year ended December 31, 2002, with the Securities and Exchange Commission, as combined with the Annual Report on Form 10-K, for the year ended December 31, 2002 of CH Energy Group, Inc., the parent corporation, pursuant to the applicable provisions of the Securities Exchange Act of 1934, together with any and all amendments and supplements to said Annual Report and any and all other documents to be signed and filed with the Securities and Exchange Commission in connection therewith, hereby granting to said attorneys, and each of them, full power and authority to do and perform each and every act and thing whatsoever requisite and necessary to be done in the premises as fully, to all intents and purposes, as I might or could do if personally present, hereby ratifying and confirming in all respects all that said attorneys or any of them may or shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have set my hand and seal this 22nd day of January, 2003.
/s/ Donna S. Doyle L.S. ---------------------------------) : ss.: COUNTY OF DUTCHESS ) STATE OF NEW YORK

On this 22nd day of January, 2003, before me personally came DONNA S. DOYLE to me known and known to me to be the individual described in and who executed the foregoing instrument, and duly acknowledged to me that he executed the same.
/s/ Sharron E. Smith ---------------------------------Notary Public

Exhibit 99.(i)10 STATE OF NEW YORK PUBLIC SERVICE COMMISSION At a session of the Public Service Commission held in the City of Albany on September 18, 2002 COMMISSIONERS PRESENT: Maureen O. Helmer, Chairman
Thomas J. Dunleavy James D. Bennett Leonard A. Weiss Neal N. Galvin CASE 00-E-1273 Central Hudson Gas & Electric Corporation - Proceeding on Motion of the Commission as to the Rates, Charges, Rules and Regulations of Central Hudson Gas & Electric Corporation for Electric Service. ORDER ADOPTING ECONOMIC DEVELOPMENT PROGRAM (Issued and Effective October 3, 2002)

BY THE COMMISSION: BACKGROUND Under the Rate Plan Order for Central Hudson Gas & Electric Corporation (Central Hudson), a Benefit Fund was created as the depository for the net proceeds from the utility's sale of its generating facilities.1 Among the costs recovered from the Benefit Fund are the expenses incurred for an Economic Development Program (EDP) that would encourage the relocation, growth, expansion and retention of business customers in the utility's service territory. The Rate Plan Order provided for a collaborative process, to commence about 1 Case 00-E-1273, supra, Order Establishing Rates (issued October 25, 2001)(Rate Plan Order) -1-

CASE 00-E-1273 January 15, 2002, where proposals to make disbursements from the Benefit Fund for the EDP and other programs would be addressed.2 After Central Hudson and parties to this proceeding engaged in the collaborative process, the utility, in a filing dated July 8, 2002, submitted a proposed EDP. In a Notice Soliciting Comments issued July 19, 2002, parties were asked to comment on the EDP proposal by August 19, 2002. Several parties timely filed comments in response to the Notice, while other parties submitted comments by September 9, 2002, within the time prescribed under State Administrative Procedure Act (SAPA) ss.202(1). Central Hudson filed reply comments on that date. POSITIONS OF THE PARTIES Central Hudson's Filing Central Hudson proposes to use Benefit Fund disbursements for promoting economic development activities in the Hudson Valley region. The utility would spend up to $11 million over a five-year period ending on May 31, 2007. To assure adequate availability of funds, the utility would limit spending to no more than $3 million per year. Funding, Central Hudson reports, will be spent in five broad categories: attraction, retention, expansion, utility infrastructure, and regional marketing and informational advertising. A variety of projects, the utility continues, will be selected as funding recipients, with the overall goal of lowering the cost of doing business in the utility's service territory. The attraction spending, Central Hudson relates, is intended to encourage businesses to locate in the utility's 2 Other Benefit Fund spending proposals are authorized in an Order Approving Benefit Fund Disbursements issued today in this Proceeding. -2-

CASE 00-E-1273 service territory. Qualifying businesses will receive utility delivery bill rebates or electric infrastructure incentives. The magnitude of the incentives will be developed based on the number of jobs created and the amount of capital invested. Turning to business retention, Central Hudson states it will assist businesses in developing solutions that enhance their long-term profitability and viability. The utility would mitigate cost barriers businesses may face arising out of utility delivery bills or delivery infrastructure arrangements. It would also fund measures to assist businesses in more efficiently using the energy they consume. The EDP, Central Hudson notes, promotes expansion by fostering growth opportunities for existing business customers. Again, delivery bills and utility infrastructure cost barriers will be mitigated, based on the number of new jobs created and the amount of new capital invested. Increasing load on existing utility infrastructure facilities that are currently under-utilized, Central Hudson explains, would also encourage economic development. Bill rebates would be offered to businesses that expand or relocate at sites where there is excess utility infrastructure capacity. To foster business relocation, Central Hudson relates, it will fund regional marketing efforts promoting a regional identity for the Hudson Valley that will attract businesses. Informational advertising, the utility continues, will disseminate the benefits that attend a business location in the Hudson Valley. These efforts would be effectuated through utility-sponsored broker tours, direct mail solicitations, and attendance at trade shows and demonstrations. Central Hudson will also develop a data repository that businesses analyzing relocation could access readily in seeking the information needed to make relocation decisions. -3-

CASE 00-E-1273 Oversight of the EDP, Central Hudson explains, would be vested in a governance board with membership drawn from economic development organizations and other interested entities active in the Hudson Valley region. While the governance board would assist Central Hudson in developing economic development strategies and coordinating them with other regional efforts, the utility would retain final approval authority over proposed projects and spending. If a dispute arises over spending on a particular project, Central Hudson would refer the matter to the Director of the Office of Consumer Education and Advocacy (OCEA) for expeditious resolution. Parties would retain their right to appeal the Director's decision to the Commission. Central Hudson also reports it has developed extensive project selection criteria, and that it will prepare an Annual Report on its economic development activities. CPB The Consumer Protection Board (CPB) finds Central Hudson's EDP well-designed and balanced. CPB thinks the Program will reduce the cost of doing business in Central Hudson's service territory to the benefit of all of Central Hudson's customers. Dutchess EDC The Dutchess County Economic Development Corporation (Dutchess EDC) supports Central Hudson's EDP. Dutchess EDC believes the EDP will promote business activity in its environs. -4-

CASE 00-E-1273 ESD The Empire State Development Corporation (ESD) generally supports Central Hudson's proposed EDP, because it would attract, expand and retain employment opportunities in the Mid-Hudson Valley region. ESD believes Central Hudson will coordinate economic development efforts through its regional marketing approach, maximizing the economic development that can be achieved from the proposed spending. Since Central Hudson is a low-cost energy provider, ESD continues, informational advertising to disseminate its cost advantages is an important feature of its particular EDP. Advocating the implementation of the governance board proposal, ESD claims the board will coordinate public and private partners and eliminate duplication of economic development efforts. ESD also maintains the proposed $11 million in funding for the EDP is adequate and that the Annual Report requirement is appropriate. ESD would welcome the opportunity to work with the utility and Staff in developing the Annual Report. ESD, however, questions Central Hudson's proposed dispute resolution process. ESD is concerned that the Director of OCEA might become the final arbiter of disputes, perhaps impairing the utility's ability to effectively and efficiently manage the program and impeding the governance board's ability to effectively facilitate economic development planning. ESD prefers a process where final authority is retained by Central Hudson, with an appeal to the Commission only in extreme circumstances. The Greenways The Hudson River Valley Greenway Economic Heritage Committee, supported by the Hudson River Valley Greenway Communities Council (the Greenways) advocate approval of Central. -5-

CASE 00-E-1273 Hudson's EDP. The Greenways believe that Central Hudson's development of a regional economic development database and its funding of marketing campaigns will benefit the entire Mid-Hudson Valley region. IBM According to International Business Machines Corporation (IBM), it is Central Hudson's largest electric customer, taking approximately 14% of the utility's total electricity deliveries annually. IBM relates, however, that it faces intense competition in the worldwide marketplace for the goods and services it furnishes. IBM is particularly concerned about costs related to four substations devoted to serving facilities it operates within Central Hudson's service territory. IBM protests that Central Hudson has insisted upon retaining ownership of those substations, even though many industrial companies own the substations dedicated to them. IBM reports that its substation charges amount to approximately $1.9 million per year, more than its substation costs in other regions of the country. Reducing substation costs, IBM asserts, would be an appropriate economic development effort. It notes that the Rate Plan Order requires consideration of substation costs if needed to retain jobs. IBM, however, fears that the Central Hudson's EDP budget is inadequate. According to IBM, the $11 million budget is considerably below spending levels at comparably sized utilities. For example, IBM continues, Rochester Gas & Electric Corporation, plans to spend $13 million annually -- more in one year than Central Hudson would spend over five years. IBM also contends that comparison of Central Hudson's budget to that of larger utilities, when adjusted for size, would further demonstrate that Central Hudson is under-spending on its EDP. -6-

CASE 00-E-1273 For those reasons, it asks that Central Hudson be directed to increase the size of its budget. IBM also views the proposed $3 million cap on EDP expenditures in any one year as a further barrier to appropriate economic development funding. It would have the $3 million figure serve as a floor for annual spending, rather than act as a ceiling on that spending. IBM declares that Central Hudson's proposed spending of $1.5 million annually on informational advertising is both excessive and unbalanced. Advertising, IBM complains, would consume too large a portion of an already inadequate funding effort. IBM would better balance the EDP by reducing substantially the proportion of the budget spent on advertising. According to IBM, Central Hudson's criteria for selecting the proposed projects that will be funded could erect another barrier to effective economic development. IBM cautions that the awarding of beneficial economic development aid could be postponed while the project selection criteria and a project ranking process are implemented. IBM would approach project selection flexibly, by simplifying application forms and taking other steps that would allow project evaluation to move forward more swiftly with fewer impediments. Orange County The Orange County Partnership (Orange County) relates that it is the leading economic development agency for Orange County. It strongly supports Central Hudson's EDP, maintaining that it is properly funded and that the regional focus is beneficial. -7-

CASE 00-E-1273 Putnam EDC The Putnam County Economic Development Corporation and the Putnam County Industrial Development Agency (Putnam EDC) supports Central Hudson's EDP and praises Central Hudson's partnership in economic development efforts. As a small county, it explains, it will benefit in particular by retaining its existing businesses through the EDP. Ulster EDC The Ulster County Development Corporation and the Ulster County Chamber of Commerce (Ulster EDC) agree that Central Hudson is a highly reliable economic development partner. Ulster EDC believes that the proposed informational advertising component of the EDP is particularly important for its purposes, as it seeks to attract new businesses to empty commercial and industrial property formerly occupied by IBM. Central Hudson's Response Responding to IBM, Central Hudson relates that it expects its largest customer will be an active participant in the EDP. The utility argues, however, that the EDP is not intended to stream benefits to any one customer. Instead, the EDP's purpose is to grow and diversify the economy in the service territory. Central Hudson disputes IBM's analysis of substation costs. According to the utility, IBM freely entered into the contracts establishing the substation costs and could cancel them after giving notice if it thought they were economically disadvantageous. The utility also asserts that IBM's bills are comparatively low even after the substation costs are reflected. IBM, the utility maintains, has received substantial state and utility aid in the past, despite a 53% decline in electricity usage and a 51% decline in employment since 1990. -8-

CASE 00-E-1273 Any further economic development aid to IBM, the utility argues, would have to be accompanied by job retention guarantees. The $11 million EDP budget, Central Hudson maintains, is adequate notwithstanding IBM's contentions to the contrary. Central Hudson asserts other utilities may be compelled to spend more on economic development because their rates are well above Central Hudson's competitive prices. The $3 million annual spending ceiling and the informational advertising spending, the utility asserts, are features of a properly designed and balanced program. The utility also defends its application process and project selection criteria, as integral to the fair and orderly implementation of the EDP. DISCUSSION AND CONCLUSION Because Central Hudson's EDP proposal properly promotes economic development within its service territory, the EDP's terms and conditions are adopted, subject to modification of the dispute resolution process and further development of reporting and project selection criteria. Central Hudson is authorized to make the disbursements from the Benefit Fund necessary to support the EDP spending it describes. Central Hudson's proposed EDP budget of $11 million over a five-year term, with no more than $3 million spent in any one year, should adequately promote economic development. The proposed spending equates roughly to Central Hudson's economic development rate discounts in the years before the current Rate Plan took effect on July 1, 2001. Since the utility's spending accords with its historic experience, comparisons to other utilities, where economic activity and circumstances may differ dramatically from the situation in the Mid-Hudson Valley, are not persuasive. -9-

CASE 00-E-1273 Proposals to restrict Central Hudson's economic development spending by limiting the proportion allocated to informational advertising are rejected. Informational advertising is particularly appropriate for Central Hudson, because it conveys to a broader audience the low rates it can offer, priced below levels at other New York and Northeastern utilities. The potential benefit also justifies the expense; if advertising attracts new load in the amount of 10 MW to its service territory, Central Hudson could realize up to $1 million annually in enhanced revenues. Moreover, affording Central Hudson discretion in spending the economic development funds optimizes the economic development results it can obtain. While Central Hudson would spend up to $1.5 million per year on advertising, including $.3 million allocated to EDP administration, that budgeting is reasonable, in part because the utility retains the discretion to reduce that level of spending if appropriate. Even if spending on advertising reaches the budget maximum, the utility still retains funds in the $11 million budget for bill discounts and other appropriate measures to alleviate individual cost impacts where needed to attract or retain a business. (3) While the utility's approach to advertising spending is conceptually reasonable, its actual expenditures remain subject to our review in order to adequately protect ratepayer interests. 3 The budget includes the cost of the economic revitalization discount provided for in the Rate Plan Order at p. 5; a tariff implementing that service is awaiting consideration. Case 02-E-1025, Central Hudson Gas & Electric Corporation - Tariff Modifying S.C. Nos. 2 and 3 to Include an Economic Revitalization Discount to Provide For an Incentive to Customers to Occupy Existing Vacant Buildings (filed August 8, 2002). - 10 -

CASE 00-E-1273 The Director of OCEA, ESD protests, should not decide disputes arising out of Program implementation -- a role created under the dispute resolution process. OCEA's expertise, however, may prove useful in facilitating or arbitrating an outcome to a dispute that the utility and another party have been unable to successfully settle. And appeals or complaints to us subsequent to a decision by the Director of OCEA are permissible. One modification to the dispute resolution process is needed. To assist in arriving at dispute resolution decisions that reflect our overall policies and goals, the Director of OCEA shall consult with the Chairman before deciding a dispute. While flexibility in implementing the EDP maximizes the benefits of economic development spending, adequate accountability also must be ensured. As a result, Central Hudson shall develop guidelines for operating the Program and criteria for selecting individual projects for funding. Generic guidelines and criteria that the utility should adapt to its particular circumstances are attached in Appendices A and B. Central Hudson shall submit its proposed guidelines - 11 -

and program selection criteria to the Director of OCEA for review within 30 days of the date of this Order. Moreover, the Annual Report Central Hudson will file on EDP Program evaluation shall be submitted to the Director of OCEA within 60 days following the end of each Program year. The Commission orders: 1. Central Hudson Gas & Electric Corporation is directed and authorized to disburse from the Benefit Fund the spending on the Economic Development Program discussed in the body of this Order, and is directed to implement the Program CASE 00-E-1273 subject to the conditions and modifications discussed in the body of this Order. 2. Central Hudson Gas & Electric Corporation shall submit, to the Director of the Office of Consumer Education and Advocacy, Economic Development Program guidelines and project selection criteria for review within 30 days of the date of this Order, in conformance with the discussion in the body of this Order. 3. Central Hudson Gas & Electric Corporation shall submit an Annual Report on the Economic Development Program to the Director of the Office of Consumer Education and Advocacy within 60 days of the end of each year of the Program. 4. This proceeding is continued.
By the Commission, (SIGNED) JANET HAND DEIXLER Secretary

- 12 -

CASE 00-E-1273 APPENDIX A Generic Program Guidelines for Economic Development Grants and Awards I. APPLICATION 1. All applicants that apply for funding (including second, third, and fourth parties), must identify the overall program category under which they are applying: a. Attraction - economic incentives offered to relocate into the utility's service territory; b. Retention - economic incentives offered to encourage business retention; includes reduction of substation costs that would lead to job retention; c. Expansion - supports growth opportunities; d. Utility Facilities - increases utilization of existing utility facilities without significant additional investment; and e. Marketing - informational advertising that may be effective in conjunction with regional advertising. 2. A funding candidate shall submit to the company for its review documentation demonstrating that its proposed project or performance satisfies the project selection criteria attached as Appendix B. 3. All applicants shall provide the proposed amount requested, a supporting budget, and an estimated expenditure timeline with milestones showing how and when funds will be expended. 4. II. REVIEW/SELECTION 1. The company is ultimately responsible for decisions to award funds. 2. The company shall review and evaluate applications, by program category, based on the project selection criteria. 3. To implement selection flexibly, the company shall review applications in accordance with the project selection criteria and evaluate applications based on the overall goal of furthering the objective of any of the following program categories: Attraction, Retention, Expansion, Utility Facilities, and Marketing. 4. The company shall maintain the supporting documentation justifying its reasoning for approval or rejection of each proposed project. Each award shall be supported by a work order that accurately reflects the funding the company supplies. - 13 -

CASE 00-E-1273 APPENDIX A III. REPORTING/EVALUATION REQUIREMENTS 1. A review and evaluation of each funding allowance shall be performed according to the criteria described in the application. 2. Funding recipients shall file a semi-annual progress report with the company after receipt of an award and a final report when the project is completed. The report shall describe, by program category, the recipient's expenditures and the economic activity criteria it achieved or made progress toward. The report shall compare the recipient's progress to the criteria proposed in its application. The recipient shall maintain supporting documentation (i.e., expense vouchers) for company review. The company shall review each report and make a recommendation, if applicable, on whether funding should be continued. 3. The company shall review and evaluate the reports received from each recipient for that program year and provide a description of each funding award by program category. The company shall include this information in the Annual Report to be filed with the Director of the Office of Consumer Education and Advocacy within 60 days after the end of each program year. The company's Report shall state the basis for each award, the amount awarded, achievements, and the basis for making the award, and compare the actual amounts expended to the achievements or progress made. 4. When funding regional advertising, for the program category of "Marketing," the company shall list matching funds from other regional agencies. IV. PROJECT CANCELLATION 1. Any recipient that fails to fulfill the reporting and evaluation requirements described in Section III may be subject to the loss of its grant or award and may be prohibited from applying for additional funding, pending review of its performance. 2. Any recipient that uses funds in a manner not described in its application, as approved, is subject to suspension of its funding and may be prohibited from applying for future funding, pending review of its performance. 3. A recipient of a multi-year award shall demonstrate in its semi-annual report that it achieved performance standards or milestones before further funds will be provided. - 14 -

CASE 00-E-1273 Appendix B
Programs: Selection criteria: capital invested number of jobs at risk number of new or potential new jobs incremental utility revenue must expand or relocate I Attraction Program (a) X X II Retention Program X X III Expansion Program X X IV Utility Facilities V Adve

X X X

VIII Additional Program Criteria number of jobs X capital investment X new/improved construction (sq ft.) X energy efficiency (kWh,therms, peak load) no. new expansion/attraction projects CHGE territory X no. of attraction leads other development leveraged financial condition management experience credit references amount of entity's contribution amount of financing leverage incremental utility revenue benefits to other utility customers Economic Development Plan Proposed Selection Criteria Summary X X X X X X X X X X X X X X X X X X X X X

X

X X

X X

X X X X X X X

X X X X X X X X

X

- 15 -

Exhibit 99.(i)11 Filed Session of October 23, 2002 Approved as Recommended and so Ordered by the Commission

JANET HAND DEIXLER Secretary Issued and Effective October 25, 2002 STATE OF NEW YORK DEPARTMENT OF PUBLIC SERVICE October 3, 2002
TO: FROM: SUBJECT: THE COMMISSION OFFICE OF ACCOUNTING & FINANCE CASE 01-G-1821 - Petition of Central Hudson Gas & Electric Corporation for Approval to defer Environmental Site Investigation and Remediation Costs, filed in C 9218 (SAPA No. 01-G-1821SA1)

SUMMARY OF RECOMMENDATION:

The Commission should authorize Central Hudson Gas & Electric Corporation (the company) to establish a deferred accounting plan for 2002 and future years site identification and remediation costs relating to the company's remaining seven former manufactured gas plants. The company's deferred accounting plan should be subject to the conditions discussed in this memorandum.

Summary In a petition filed on November 16, 2001, Central Hudson Gas & Electric Corporation (Central Hudson or the company) requests Commission approval to defer costs for calendar year 2002 and future years relating to its former manufactured gas plants (MGPs). The company's seven (7) former MGPs were recently relisted on the NYS Department of Environmental Conservation's (DEC) Inactive Hazardous Waste Sites Register, which could lead to significant environmental cleanup costs. In calendar year 2002, Central Hudson has already incurred $505,227 of actual SIR costs and also recorded a $2.5 million contingent liability for its estimated remediation costs at one of its MGPs. The remaining six MGPs are. -1-

CASE 01-G-1821 currently under investigation by the DEC, but no cost estimates are available. Absent deferred accounting treatment, these costs could have an adverse impact on the company's earnings. Staff from the Office of Accounting & Finance has reviewed Central Hudson's petition and supporting documentation. Considering the multi-year nature of environmental cleanups, staff recommends that the Commission approve an accounting plan by which the company's 2002 and future site identification and remediation (SIR) costs may qualify for deferred accounting treatment. Under the accounting plan, Central Hudson will submit to the Commission, on an annual basis, an environmental report (see Ordering Clause No. 4), which will include a materiality calculation, a calculation of the amount of incremental SIR costs and ratemaking earnings calculation. After an examination of the report, the Director of Accounting & Finance will then submit a letter to the company on the amount of authorized deferred SIR costs. For ratemaking purposes, any deferred SIR costs authorized by the Director of Accounting & Finance will be considered for recovery from the company's customer benefit fund (1) in the collaboration on the fund scheduled to commence November 1, 2003, (2) or recovery may be arranged for in a rate case. Staff from the Office of Gas & Water and Leonard Van Ryn from the Office of General Counsel has reviewed this memorandum and concurs with our recommendations. Background Central Hudson and its predecessor companies operated eight (8) MGPs from the 1850s until the 1950s. Coal tars and other byproducts were typically generated during the coal gas manufacturing process. Studies performed by the company and the DEC from 1986 to 1990 indicated little risk of human exposure to coal tar remaining on the Central Hudson sites. DEC subsequently removed the sites from its Inactive Hazardous Waste Sites Register. In 1994, the City of Newburgh (City) notified Central Hudson that it had encountered a tar-like substance at its wastewater treatment plant that the City alleged had migrated from the company's former MGP. Subsequently, the company and City settled (1) Central Hudson's customer benefit fund has a balance of $186.7 million as of June 30, 2002 which includes the net proceeds from the sale of the company's fossil generation. (2) Case 00-E-1273, supra, Order Authorizing Benefit Fund Disbursements (issued October 3, 2002). -2-

CASE 01-G-1821 litigation related to the MGP and remediation alternatives are currently under investigation with DEC pursuant to a Consent Order. The $16 million of SIR costs (including contingencies) related to the Newburgh site were deferred pursuant to the Commission's Order in Case 95-M-0874 and were subsequently offset against deferred credits in the company's recent multi-year rate agreement.(3) In February 1999, the DEC informed Central Hudson that it intended to conduct additional site assessments at three of the company's remaining seven (7) former MGPs. Central Hudson subsequently performed supplemental site assessments under agreements negotiated with the DEC. Based on the results of the additional assessments, the company expects to begin remediation efforts and incur significant costs at one or more of the MGPs in 2002. Preliminary estimates by the company are that the total cleanup costs for year 2002 would be in excess of $3 million. Company's Filing Central Hudson requests that the Commission grant authorization to employ deferred accounting treatment for the 2002 and future years incremental costs (excluding company labor) related to environmental SIR actions at its former MGPs. The company believes that deferred accounting should be permitted because the costs in question are a legitimate cost of service that were not reasonably known at the time of the company's last rate case, and without deferred accounting these costs will distort the company's earnings. The company also requests deferral of legal costs, which may be incurred, related to any of the MGPs. Central Hudson believes that defending its position on clean up costs is a prudent action for both the company and ratepayers and could likely result in mitigation of remediation costs. Additionally, permission is requested to defer consultant fees and costs related to negotiation of insurance settlements. Any insurance settlements would be credited against the deferred costs. Central Hudson requests that the Commission grant deferral of the above costs, plus carrying charges, until such time as recovery is provided for in a rate proceeding. It requests that a determination (3) Cases 00-E-1273 and 00-G-1274, Proceeding on Motion of the Commission as to the Rates, Charges, Rules and Regulations of Central Hudson Gas & Electric Corporation for Electric and Gas Service, Order Establishing Rates (issued October 25, 2001). -3-

CASE 01-G-1821 be made as soon as possible to provide the authorization needed to record these costs as a regulatory asset on the company's books and records. Discussion The Commission has traditionally applied a three-step process in examining deferred accounting requests. To qualify for deferred accounting treatment, an item must be incremental to current rates; the amount must be material to the utility's earnings; and the utility cannot be over earning. In addition, deferral petitions are normally addressed after the close of the year in which the costs are actually incurred. This allows staff an opportunity to examine the costs and review the utility's overall earnings position. However, considering the environmental nature of these costs and the fact that the costs will be incurred over several years, staff recommends that a deferred accounting plan be approved for Central Hudson's remaining SIR costs. Staff is not recommending the deferral of any specific amount of SIR costs at this time, but rather establishing an accounting plan by which the company's 2002 and future years SIR costs may qualify for deferred accounting treatment. The advantage of the accounting plan is that it streamlines regulation by eliminating the need for the company to file annual petitions. The company's deferred accounting plan, however, should be subject to all the conditions discussed below. Central Hudson's SIR costs have traditionally been treated as a gas operations expenditure. However, in Cases 00-E-1273 and 00-G-1274, the company proposed to allocate the deferred SIR costs associated with the Newburgh MGP between electric and gas using the company's common allocation factor. In addition, the company requested permission to offset the deferred Newburgh costs against the customer benefit fund, which was funded predominantly from electric operations. Staff did not object to either proposal and the Commission accepted the company's positions in its Order. As a result, staff believes it is appropriate to treat the company's current and future SIR costs as a corporate wide expenditure. By doing so, total company figures will be used to test for materiality, the incremental nature of the costs, and over earnings. The SIR costs that Central Hudson will incur to investigate and remediate the remaining MGPs are unanticipated and nonrecurring in nature. The company claims that there is no provision for these costs in current rates, and therefore they are incremental in nature. Central Hudson is also requesting permission to defer legal fees and costs related to insurance -4-

CASE 01-G-1821 negotiations. Staff cannot determine at this time if all related SIR costs are truly incremental since the company's current rates were based on a specific level of environmental, legal and outside services costs. To facilitate the deferral process, the company should be required to submit an annual calculation of its incremental SIR costs by taking into account rate allowances for like-kind expenses such as environmental, legal and outside consultant fees. This calculation should be included in the company's annual compliance filing. The Commission's current policy on materiality is that an item must exceed 5% of the company's net income to qualify for deferred accounting treatment. Considering the environmental nature of the costs, staff recommends that a lower threshold (3%) be used in this case. A 3% materiality threshold would protect the company from otherwise expensing annual SIR costs in the range of $2 million to $2.5 million. However, the 3% materiality test must be met each year by the company and will be calculated on actual cash expenditures only. Recorded accruals and contingencies will be excluded from this calculation. The company's annual filing should include this materiality calculation. The third test in examining deferred accounting requests relates to a utility's earnings position. The Commission has traditionally denied deferred accounting requests if the utility has sufficient earnings to absorb the costs. Staff recommends the continuation of this practice for Central Hudson's SIR costs. Specifically, the company should be permitted to defer SIR costs up to its authorized return on equity (ROE) of 10.3%. Earnings above 10.3% should be used to offset the company's SIR costs. The company's annual filing should also include an earnings calculation (actual versus authorized). As stated earlier in this memorandum, Central Hudson is also requesting permission to defer costs related to insurance negotiations. According to its petition, the company expects to begin negotiations with its insurance companies in 2002. Staff recommends that the Commission stipulates that any recovery by the company from insurance companies and/or other responsible third-parties are deferred pending an offset to the deferred SIR costs. The company also requests permission to accrue a carrying charge on the deferred costs. Considering the multiyear nature of environmental cleanups, staff concurs with the company. Specifically, Central Hudson should be allowed to accrue interest at a rate equal to the -5-

CASE 01-G-1821 unadjusted customer deposit rate (4) only on the portion of deferred SIR costs that represent actual cash expenditures. The interest accrual shall cease once the deferred costs are offset against the company's customer benefit fund. Recorded accruals and/or contingencies will not be included in the interest calculation. The unadjusted customer deposit rate for 2002 is 6.45% and is reset by the Commission on an annual basis. Once the Director of Accounting & Finance has authorized the deferral of any SIR costs, the company should be permitted to seek the offset of the deferred costs against its customer benefit fund in the benefit fund collaborative scheduled to commence November 1, 2003. The advantage to this approach is that it eliminates the buildup of regulatory assets, minimizes interest accruals and provides certainty on the recovery of the deferred costs if Central Hudson delays the filing of a rate case beyond November 1, 2003. If it files prior to that date, recovery could be arranged for in the rate case process. Although the deferred accounting plan endorsed by staff is based on actual SIR costs only, staff is not suggesting that the company cannot defer costs associated with contingent liabilities. The company may defer these costs, but at their own risk. Staff cannot assure recovery of any contingencies until actual costs have been expended and staff has had an opportunity to examine the full financial impact including a test for materiality, a determination on whether the costs are incremental, and a review of the company's earnings position. Recommendation It is recommended that the Commission adopt the following authorizations and directives: 1. Central Hudson Gas & Electric Corporation is authorized to defer in Account 186, Miscellaneous Deferred Debits, the 2002 and future years incremental site investigation and remediation costs (excluding company labor), related to the company's remaining seven manufactured gas sites. To qualify for deferred accounting treatment, the costs must meet all the criteria and safeguards discussed in this memorandum. (4) This is consistent with the Commission's treatment of Central Hudson's deferred Newburgh SIR costs, Case 95-M-0874, Untitled Order (Issued June 3, 1997) and Con Edison's deferred SIR costs, Case 96-G-0548, Opinion and Order Approving Settlement Agreement with Changes (Issued February 19, 1997). -6-

CASE 01-G-1821 2. Central Hudson Gas & Electric Corporation is authorized to defer in Account 186, Miscellaneous Deferred Debits, a carrying charge on the deferred SIR costs in Clause 1 above, beginning January 1, 2002, at a rate equal to the unadjusted customer deposit rate as determined by the Commission. 3. Central Hudson Gas & Electric Corporation is directed to credit Account 186, Miscellaneous Deferred Debits, with any recovery of SIR costs, as described in Clause 1 above, from other potential responsible parties, insurance carriers, or other sources. 4. Central Hudson Gas & Electric Corporation is directed to submit an annual report detailing the status of environmental measures at all manufactured gas sites where the company may be required to perform remediation. The report shall include all relevant information on the status of these sites, and shall include, but not be limited to, a site-by-site description of the work completed at each site, including relevant dates, corresponding costs, recovery of reimbursement of costs, and whether the work was undertaken in response to on-site or off-site contamination, the work still to be performed, copies of applicable orders from Environmental Protection Agency, the Department of Environmental Conservation or other governmental bodies, and cost estimates for future work, broken down by the type and source of costs. The report shall also include a calculation of the amount of incremental SIR costs on an annual basis, a 3% materiality threshold calculation performed annually and an annual calculation comparing Central Hudson Gas & Electric Corporation's actual versus allowed ratemaking return on equity including the amount of excess earnings. The report will be filed with the Secretary of the Public Service Commission on an annual basis, with the first report to be filed no later than February 28, 2003. 5. The proceeding be continued. -7-

CASE 01-G-1821 Respectively submitted, RICHARD M. DAVI Public Utilities Auditor II Office of Accounting and Finance Reviewed by: JOSEPH G. LOCHNER
Supervisor Office of Accounting and Finance Approved by: Approved by:

FREDERICK J. PERKINS Chief, Utility Accounting and Finance Office of Accounting and Finance

LEONARD VAN RYN Assistant Counsel Office of General Counsel

-8-


								
To top